He wrote the poem in 1818 when egyptology was not even two decades old and still entirely based on looting, wild guesses and Greek works, hence the Ozymandias (Egyptian writings were first translated in 1822!). The poem was based on news of Younger Memnon statue which was in the process of being looted by the British.
Fun fact: he did accidentally get the pharaoh correct because while the statue was mislabeled as depicting Homeric king of Ethiopia, it really is a statue of Ramesses II and the name Ozymandias was Greek misspelling of Usermaatre.
Fun fact 2: he never visited Egypt and the oldest known photographs of Ramesseum were made long after his death.
So he assumed that there would be legs remaining somewhere in Egypt since the stolen part was above waist. And indeed the legs are still standing there, just not in the open desert but in front of Ramesseum, though the temple is in bad shape and back then it might be largely buried.
Fun fact 3: The poem was written for contest with his friend Horace Smith, who wrote his own version, which is way less known and worse but imo funnier since it mention annihilated London:

In Egypt's sandy silence, all alone,
Stands a gigantic Leg, which far off throws
The only shadow that the Desert knows:—
"I am great Ozymandias," saith the stone,
"The King of Kings; this mighty City shows
The wonders of my hand."— The City's gone,—
Naught but the Leg remaining to disclose
The site of this forgotten Babylon.

We wonder — and some Hunter may express
Wonder like ours, when thro' the wilderness
Where London stood, holding the Wolf in chace,
He meets some fragment huge, and stops to guess
What powerful but unrecorded race
Once dwelt in that annihilated place.

— Horace Smith, "Ozymandias"